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ronsmith100
06-22-2010, 10:41 AM
I was floored to read this. Instead of offshoring manufacturing to the Asia companies are bringing jobs back! They call it onshoring or reshoring or backshoring.
Its a good trend to have

http://www.kanabco.com/vmsbbs/index.php?topic=563.0

Tony Ennis
06-22-2010, 12:27 PM
Interesting a sounds good. However, these lines leap from the page:


The trend ... is gaining momentum as a weak U.S. dollar makes it costlier to import products from overseas.

So, when the dollar recovers that will happen? Will outsourcing begin again?


Manufacturers are also counting on White House jobs incentives

What are these government incentives? Propping up an uncompetitive company with government funds is foolish.

MTNGUN
06-22-2010, 02:43 PM
I call BS.

First off, the source is the Wall effing Street Journal, owned by Robert Murdoch.

Second, the article offers no statistics to back up its claim, just a few anecdotal stories. You could just as easily cherry pick stories about manufacturing companies that are still laying off or outsourcing.

ldn
06-22-2010, 04:48 PM
So, when the dollar recovers that will happen? Will outsourcing begin again?


I was just talking to a guy today who imports electronic components from China. He was telling me that on his last visit he found out that the Chinese workers are starting to organize and demand higher wages (good for them!).

Also apparently their is some factor that is causing rural Chinese who typically worked cheap in the factories to return to the country for farming jobs. Not sure what that factor is but the factories are having a hard time meeting demand and lead times for some specialty components are up to 20 weeks.

So, restricted supply plus increased labor costs means that the era of cheap off-shoring may be coming to end -- at least until some other emerging economy takes their place.

smalltime
06-22-2010, 05:36 PM
I call BS.

First off, the source is the Wall effing Street Journal, owned by Robert Murdoch.

Second, the article offers no statistics to back up its claim, just a few anecdotal stories. You could just as easily cherry pick stories about manufacturing companies that are still laying off or outsourcing.

So which paper would you believe if it ran there?

Unlike most papers, the WSJ HAS to maintain credibility. If they make up a story, investors will find other news outlets, pronto. If they got the reputation of inventing, or skewing a storyline, people loose money.

The retribution is almost instant. Tell me the wrong stuff, I don't buy your paper.;)

Punkinhead
06-22-2010, 07:35 PM
So which paper would you believe if it ran there?The one that gave some actual numbers and statistics to back up their claim. The only jobs they list as coming back to the US are 10 in Florida and some vague "maybes" for Caterpillar. I'm not quite ready to break out the champagne.

tlfamm
06-22-2010, 07:49 PM
A recent WaPo article discusses labor unrest in China:

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/06/AR2010060603295.html?hpid=artslot



I was just talking to a guy today who imports electronic components from China. He was telling me that on his last visit he found out that the Chinese workers are starting to organize and demand higher wages (good for them!).

Also apparently their is some factor that is causing rural Chinese who typically worked cheap in the factories to return to the country for farming jobs. Not sure what that factor is but the factories are having a hard time meeting demand and lead times for some specialty components are up to 20 weeks.

So, restricted supply plus increased labor costs means that the era of cheap off-shoring may be coming to end -- at least until some other emerging economy takes their place.

oldbikerdude37
06-22-2010, 07:51 PM
Oh no... poor kids in china have to work,,,,,, the horror!

Liger Zero
06-22-2010, 07:56 PM
Relax folks, Annex Manufacturing just announced that they are shutting down the plant in Lyons NY, 125 jobs are headed to china! The "poor Chinamen" will have plenty of work.

This on the heals of NY state helping Annex buy the plant from Parker, then then turn around and close down their new plant.

MTNGUN
06-22-2010, 08:26 PM
If they make up a story, investors will find other news outlets, pronto. If they got the reputation of inventing, or skewing a storyline, people loose money.

The retribution is almost instant. Tell me the wrong stuff, I don't buy your paper.;)
Uh .... no, that's not how it works.

The typical WSJ subscriber is a wealthy conservative. Wealthy conservatives want to hear "news" that reinforces their conservative, pro-greed views.

For those who aren't aware, Robert Murdoch, the owner of the Whore Street Journal, also owns the Faux News channel, a conservative mouthpiece if ever there was one.

Where do I get my news ? ONLINE ! ! ! And it just so happens that I ran across this article online today:

1100 American manufacturing jobs lost as Whirlpool moves production to Mexico (http://crooksandliars.com/susie-madrak/whirlpool-moving-plant-mexico-while-c)

But, but, but...... Robert Murdoch's mouthpiece just said that manufacturers were returning to the United States ? Someone forgot to tell Whirlpool ?

firbikrhd1
06-22-2010, 08:57 PM
Nice article, and perhaps a glimmer of hope for American industry, but wishful thinking in the long term. As previously mentioned, as the Dollar recovers we will likely see a reversal of any trend like this, if it truly exists. Organization of labor in China is also wishful thinking, in my opinion. Folks there don't enjoy the freedoms we have in America. In China when workers don't do as the government tells them to the tanks are rolled out along with the soldiers. The Chinese don't seem to be as concerned as we are with world opinion.
If stimulating the return of manufacturing and America's industrial base is to be hoped for the first thing that has to happen is to put the cost of American goods on equal footing with those imported from rest of the world.
Here in America we have regulations and standards for everything including wages, safety and pollution all of which cost domestic companies money and which overseas companies aren't required to meet. Personally, I'm not one for government intervention or taxation as I believe they already have too much control in areas where they don't belong and fail miserably at whatever programs they legislate and control. Social Security, Medicare and the recent misdeeds of the Minerals Management Service are only a few examples of such failures, but that's another subject.
In this case though, taxation of any import which is produced in a country which doesn't meet the same requirements that American companies are required to meet might be the answer. A tax such as I propose which brought the cost of an imported item to an equivalent with a domestically produced item would allow American companies to more easily compete. This would bring industry back home and help resolve our current unemployment issues and the tax revenues could be used to pay down our tremendous and rapidly growing debt. Such a tax is not unprecedented if you remember the tax in Japanese motorcycles over 700 cc's when Harley Davidson was in trouble. Further, as a nation, if America is so serious about the environmental welfare of our planet (re: Global Warming hoax IHMO) and the well being of peoples in other countries we should embrace the opportunity to lift the rest of the world to higher standards for the environment and their citizens.
A tax such as I propose certainly makes more sense than a new bureaucracy for a Carbon Tax and Carbon Exchange which will do little to affect any substantial changes in "pollution", if one believes Carbon Dioxide to be a pollutant as it have been recently deemed, but will do a great deal to enrich the movers and shakers of Carbon trading while raising prices for consumers and driving more American companies overseas.

J Tiers
06-22-2010, 09:55 PM
FWIW... the name is RUPERT Murdoch.

He has an agenda, faux news chooses its stories to support that agenda, and simply does not even mention others that don't.

Some companies ARE bringing back jobs. OTHERS are just NOW finally pushing them over to china, which I have every hope will backfire on them quickly, as several factors are gonna hurt them.

1) labor problems and rising wages. This is not new, but it is likely being somewhat encouraged by the chinese government now, because they want a domestic economy. Can't have one if everyone works for nothing.

Time was when you literally could ignore the cost of labor, and nearly ignore materials, because hardly any labor was in them. "Not no more". Even 6 years ago, my former employer was getting a 5% to 10% cost increase on nearly every order.

2) slightly loosened currency policy... ANY float will hurt exports.

3) Energy costs on the way up..... that increases shipping costs.

4) chinese policy of a domestic economy..... domestic manufacturing takes away from exports. has to, unless more plants are built, and staffed. I predicted some years ago that foreigners would have to "bid" for factory time, and we may see that.

Don't get too excited, this isn't going to flood jobs back here. The best it can do is punish the companies that were last to rush over there.

The US has served its purpose of building the chinese economy, and is not needed anymore. The US is simply seen as a place that will buy until the money runs out, which, without manufacturing, it will. By that time the US won't be needed at all.

lwalker
06-22-2010, 10:11 PM
Ummm, you guys do realize that if outsourced manufacturing comes back into the US, it's not likely that jobs will return? We manufacture more than we ever have, just have very few manufacturing jobs in part due to folks like me who spend their days writing software to automate processes.

Yup, I admit it: I'm paid to do stuff that keeps businesses from having to hire people...or need fewer people than they have now.

Anyway, it's cool that we can compete with bottom-of-the-barrel priced labor, but you really have to ask yourself if that's the kind of work you want for yourself or your kids.

barts
06-22-2010, 10:52 PM
Suppose we invented a really clever robot that could do all the manufacturing? What would happen next?

I think we need to consider what to do when production requires very little labor.

- Bart

gwilson
06-22-2010, 11:39 PM
It was surprising that the last 60 Minutes said that the USA has manufactured more goods than anyone else for the last 110 years. Next year,for the first time ever in 110 years,a foreign country,China will slightly produce more than the USA.

I'm wondering what it is that we produce so much of???

J Tiers
06-23-2010, 12:25 AM
I also heard that GERMANY is almost as large a producer as chine, presumably in total value of goods, not in tonnage.

We produce a lot of things, but mostly only hot air, anymore.

We all like to say that "ALL" manufacturing has gone to china, but there is a lot that has not. Things that are too big to economically ship, they tend to get made near their destination, especially if they are not very dense, or are extremely dense.

You pay for shipping space on a volume basis, on a ship, because that is what they have to sell..... space. Goods have to be very dense to really limit on a tonnage (weight) basis and not on a tonnage (volume) basis. That's why container ships are piled so high.

Very dense things are also bad to ship, since you pay then for taking up the whole ship on a displacement basis, so they have a lot of space left.

Anyhow, wind turbine blades, and large concrete items are two things that probably are not economical to ship. And so both are made here instead of being shipped. (small concrete items like decorative stuff is shipped all the time)

other things are high quality, high value low volume items..... the chinese are good at low value high volume, with "OK" quality.

PeteF
06-23-2010, 12:54 AM
Before getting too excited about the prospect of a dismal outlook for China consider their GDP growth is around 10% PA, has been for years, and has absolutely no sign of abating. For many that's just a meaningless number but I think a better way to put that in perspective is to point out 1-2 new power stations are coming online each WEEK! These are not some pissy Honda generators we're talking about either, rather highly advanced low-emission coal fired stations using technology waaaay ahead of what you'd typically find in most western countries.

Many like to blame XXX for the fact manufacturing is leaving the US, however Germany (indeed I would extend that to other Germanic countries) is an excellent example of just how flawed those "excuses" are. Central Europe has no cheap labour pool, the cost of labour is very high, government intervention virtually the antithesis of what you may be accustomed to in the US, environmental protection compliance extremely strict, and taxation relatively high. Yet in terms of VALUE of production and exports they are doing extremely well. Maybe there's a message there ;)

Liger Zero
06-23-2010, 05:05 AM
Automation doesn't cost us jobs it SAVES jobs. There will always be a need for inspectors, shipping labor and support services like R&M. If the PRODUCTION COST of a good gets too high due to LABOR COSTS you lose all the jobs.

No one I repeat NO ONE not even myself deserves $35 an hour full health coverage and other expensive perks to manufacture GARBAGE BAGS. Yet when I worked at Tyco in Macedon we had people making that and more... to make GARBAGE BAGS.

Plastic film gets blown, stretched into a thin sheet, sheet goes through various folders-sealers-cutters, bags get folded and stacked by machines, $65 an hour seniority stands there and yells at $7.50 an hour temp because seniority has too many medical conditions to actually pick up 15 pounds of bags, turn, lift and place a stack of bags.

Before it closed down, we had people with "medical conditions" more or less sitting there collecting $60+ an hour (no ****) doing nothing at all except sit in the Lab screaming that the no good rotten temps were trying to steal their jobs.

When the price of PE resin went from $.03 a pound to $2.75 a pound nearly overnight, what little profit they made evaporated and they closed our plant down. For six glorious weeks I was making over 30 an hour doing very little work... Even then I knew it couldn't last and it didn't.

Now if the plant had been automated, we could have eliminated three layers of deadwood, brought in tenders at $9 an hour/given them basic insurance and kept the plant open.

90 jobs down the toilet due to lazy ass morons requiring a helper to do their jobs, management too chicken-**** to get rid of the deadwood, and just plain stupid greed.

J Tiers
06-23-2010, 08:31 AM
I believe Germany does not compete at all in low cost goods. So their exports are in higher cost-per-item products.

When you have a high cost environment, you can't easily do low cost tonnage goods without total automation, and that is a huge investment. The environment is best suited to products with a high per-unit cost.

the "china syndrome" is due to a very low cost AND low investment area which is totally optimized for tonnage consumer goods. Add to that a government which manipulates the currency exchange to eliminate all possibility of rising costs, and you get what happened.

The chance to have "non-existent" labor cost is a huge benefit. Labor USED to be "free" in china.

That lowers the cost of materials. The whole product imported from china, DELIVERED, cost my former employer less than 40% of the cost of MATERIALS in the US, with no labor, no factory investment, no HR costs, etc.

Why? Because the coal COST NOTHING to mine, the iron COST NOTHING to smelt, the iron COST NOTHING to refine into steel, and the steel COST NOTHING to roll into usable shapes.

The only cost was the plant, and that COST NOTHING to build, using materials that had NO LABOR CONTENT.

What part of IT COST NOTHING does someone not understand?



No one I repeat NO ONE not even myself deserves $35 an hour full health coverage and other expensive perks to manufacture GARBAGE BAGS. Yet when I worked at Tyco in Macedon we had people making that and more... to make GARBAGE BAGS.


I call BS on that. the product purpose alone does not determine the pay scale. the same process makes bags for all sorts of purposes

Productivity determines the pay scale.

A highly automated plant needs only few people, who can either be morons supported by skilled maintenance, or you can just skip the morons and keep the maintenance. You can't keep the morons and have no maintenance.

A highly automated bag making facility might have only a few well-paid folks to keep it running right.

What SHOULD pay very little is a job where the productivity of each person is low.

The price for digging a ditch is a certain amount, because the ditch is only WORTH a certian amount. You don't pay a person a half million bucks per year to dig ditches by hand, because they can't dig very many per year, so their cost is too high.

if they were able to dig 5 big ditches per day, by some "magic" means, they might very well be 'worth" a half million per year, because they have high productivity.

otherwise, you have to divide up the "ditch worth" among all the people needed to dig it, and pay each their fraction.

Tony Ennis
06-23-2010, 09:10 AM
It will be interesting to see what happens when China's labor costs are such that outsourcing stops being viable. They may decide to cash in some US bonds.

PeteF
06-23-2010, 05:28 PM
It will be interesting to see what happens when China's labor costs are such that outsourcing stops being viable. They may decide to cash in some US bonds.

You got it Tony. Countries are only continuing to lend to the US because they need the resulting consumption. Eventually the music stops.

J Tiers
06-23-2010, 10:58 PM
You got it Tony. Countries are only continuing to lend to the US because they need the resulting consumption. Eventually the music stops.

Hmmmm

The chinese just bought a lot more US debt, allegedly because they couldn't stomach the uncertainty involved in Euro debt...... and they need to buy something.

A few years ago beggars in South America would supposedly throw US money back at the giver..... I reckon they are throwing euros now.

There has been a theory making the rounds that the Euro is not long for the world, but I can't see that happening. What would happen to the debt? A default that big would make a somewhat large mess.

ronsmith100
07-16-2010, 10:47 AM
This is actually happening. Just Google theses words:
reshoring
backshoring
onshoring

Most people think its all about wages but there are many other things involved.

WAGES
Pick your country. Think up a totally burdened cost per hour of one individual.
Now compare the same to U.S. labor. The difference was/is shocking, yes?
Many articles show that even though the original cost of labor hours was 15% of US labor hours the fully burdened difference worked out to be more like 35%. Why the difference? the cost of communications. the cost of quality. the cost of education. the cost culture. the cost of managing from 7000 miles away. These are the fully burdened add ons when you go offshore. Almost all offshore companies have learned this. Still, 35% of US cost is substantial savings.

Wages are not static. Wages in china re climbing which puts a crimp in that 35%. Wages in the united state have remained static. However as the dollar falls in value the Chinese wages gets even more expensive. No one that I know can get a handle on the real savings going on... and many of them are getting nervous. About it. Its quite possible that the fully burdened cost of labor in China will soon be well over 50%.

MANAGEMENT
US based companies who have moved manufacturing off shore have run into many problems with the supply chain. Foreign countries simply dont have the infrastrucure of the commerical know-how to make "Just in Time" work.
Some offshore plants sit idle while they wait for raw materials to arrive... sometimes for weeks.
Many US companies who have gone offshore have had to warehouse more product on US soil so as to meet our consumer demands.

TRANSPORTATION
Walmart CEO estimates 13% of the cost of a Chinese toy is transportation (can't locate the link). The cost to transportation in uniformly attached to the cost of fuel and fuel is up and will be going up and up and up.

UNIONS
Many companies have off shored to dump strong unions costing more than just wages. High benefits and poor communications define unions as "strong unions". They often end up using union labor in the country they settle in but they are "weak unions" in comparison with demands only on wages and not benefits. For example Buicks are made in Mexico with Mexican union labor and railed back into the US.
As an aside, which country is the only country in the world to make automobiles without union labor? Answer: The United States. Japan, Korea, Europe, automakers are all union. We have many non-union auto plants in the US.

But this brings up another reason companies may be reshoring. They can move back to the united states and build new plants in right to work states and they have effectively busted a unions chance to reorganize.

WARREN BUFFET
Buffet bought BNSF rail for a reason. Most of it based on peak oil which is assumed to have arrived. He looks at rail transportation to take over 80% of the highway freight. Not good news if you are a long hauler. Also oil will become so expensive so soon that the 13% transportation cost of the Walmart toy from China could easily be 50% soon.

CONCLUSION
All of this leads to a world trend of local manufacturing. Putting the factories and the jobs near the consumer. So whirlpool just moved off shore?
Well here is the real offshore future, Mexico. Mexico is close enough not to be a transportation burden. Close enough to manage properly too. When I think onshoring, reshoring, or back shoring I include Mexico and NAFTA.

Wham-O is moving their manufacturing back to Michigan... surprised?

lazlo
07-16-2010, 10:54 AM
You got it Tony. Countries are only continuing to lend to the US because they need the resulting consumption. Eventually the music stops.

Australia has more debt as a percentage of GDP than the US. Most Western countries do.

By the way, I was surprised by this -- it came up in the discussion about Goldman-Sachs being paid by the Government of Greece to hide their debt with Credit Default Swaps so they could gain entry into the EU:

February 19, 2010 The World's Biggest Debtor Nations (http://www.crossingwallstreet.com/archives/2010/02/the_worlds_bigg.html)

20. United States External debt (as % of GDP): 95.9%

19. Australia External debt (as % of GDP): 108.8%

18. Hungary External debt (as % of GDP): 124.2%

17. Italy External debt (as % of GDP): 154.6%

16. Greece External debt (as % of GDP): 175.3%

15. Spain External debt (as % of GDP): 184.7%

14. Germany External debt (as % of GDP): 189.4%

13. Finland External debt (as % of GDP): 205.7%

12. Norway External debt (as % of GDP): 208.9%

11. Hong Kong External debt (as % of GDP): 218.8%

10. Portugal External debt (as % of GDP): 231.5%

9. France External debt (as % of GDP): 247.2%

8. Austria External debt (as % of GDP): 268.9%

7. Sweden External debt (as % of GDP): 275%

6. Denmark External debt (as % of GDP): 315.2%

5. Belgium External debt (as % of GDP): 345.6%

4. Switzerland External debt (as % of GDP): 390%

3. Netherlands External debt (as % of GDP): 395.6%

2. United Kingdom External debt (as % of GDP): 427.6%

1. Ireland External debt (as % of GDP): 1,352%

PeteF
07-16-2010, 07:02 PM
Australia has more debt as a percentage of GDP than the US. Most Western countries do.

By the way, I was surprised by this -- it came up in the discussion about Goldman-Sachs being paid by the Government of Greece to hide their debt with Credit Default Swaps so they could gain entry into the EU:

Yes but a lot of that debt has not gone into consumption, it has gone into mining infrastructure. I recall reading a paper from a local professor suggesting it's something along the lines of the "Australian paradox" or similar. Basically that has been the situation for the past 50 years, and can continue "indefinitely" (well, until Australia runs out of stuff to dig up anyway!). Yes bizarre as it sounds, it's certainly a very different situation to the US; lies and statistics and all that ;) I will try to find the paper is you're interested.

Ron, I'd respectfully suggest an overwhelming case of wishful thinking there. Yes there will be a trickle of companies that repatriate to the US, but that is miniscule compared to the flood heading the other way. Your points are quite correct and valid, but I'm not sure about your projections. I don't think people quite understand the massive difference in pay and conditions between western countries and, say, China. To give an appreciation, the average factory worker wage is around 900 yuan per month (about US$150), that's not per day, that's per MONTH! More the point is that many of the rights and benefits that Western workers take for granted, simply don't form part of the Chinese labour equation. Many people who haven't had business exposure simply stop at the headline rate and draw conclusions from that. In fact, in Australia for example, to calculate the TRUE cost of employing an individual worker you roughly double their base wage. It's actually slightly less than that, but covers such things as paid annual leave, sick leave, insurance, superannuation (as it's called in Australia) etc etc etc. Virtually all these "add ons" simply don't exist in places like China. The bottom line is it's absolutely nothing like 50% of a Western worker, and won't be for a LONG time.

The true reason many companies have pulled out of China is due to quality control issues. China has a major cultural problem with this. There is presently a very unhappy workforce, paid peanuts who simply don't care what they produce as long as it moves out the door.

There is no doubt that the pay and conditions in developing countries WILL improve, but it's off such a low base the chasm between "us and them" will exist for a while yet.

Tony Ennis
07-16-2010, 07:08 PM
the average factory worker wage is around 900 yuan per month (about US$150), that's not per day, that's per MONTH!

Ok, but how much does it cost to feed the family? Pay rent? etc.

I don't know how to evaluate one's pay without being able to compare it to one's expenses.

PeteF
07-16-2010, 07:58 PM
Ok, but how much does it cost to feed the family? Pay rent? etc.

I don't know how to evaluate one's pay without being able to compare it to one's expenses.

That relates to the standard of living but unfortunately has nothing to do with the cost of production.

Too_Many_Tools
07-16-2010, 08:19 PM
So which paper would you believe if it ran there?

Unlike most papers, the WSJ HAS to maintain credibility. If they make up a story, investors will find other news outlets, pronto. If they got the reputation of inventing, or skewing a storyline, people loose money.

The retribution is almost instant. Tell me the wrong stuff, I don't buy your paper.;)

NOT THE WSJ.

Try this little experiment...go to your local library and review the year's worth of WSJ prior to The Crash of '08.

You will see that the WSJ isn't worth wiping your behind in the outhouse.

TMT

ronsmith100
07-16-2010, 08:42 PM
Ron, I'd respectfully suggest an overwhelming case of wishful thinking there. Yes there will be a trickle of companies that repatriate to the US, but that is miniscule compared to the flood heading the other way. .

Please show the facts.
Can you give me any evidence whatsoever that off shoring is significantly higher than on shoring at this minute? I know you cannot as it is not fact (excluding Mexico). Offshoring started slowing down with the draw down of the dollar seven years ago and is a minor trickle now.

I'd respectfully suggest that you may be taken in by "what everyone knows" vs what is actually happening now. I am not in any way a Pollyanna pro "AMERICAN MADE" wishful thinker. I am a student of manufacturing with more than 50 years of practice and teaching. The thing most Americans simply cannot grasp is there is no reason to ever think the global economy will be anything other than "global"... and that equilibrium will be obtained a surely as water seeking its own level.

Now... my only "theory" on this is that Mexico holds more "off shoring" potentiality than does across the sea. As far as I know this is my own theory but I keep reading.

Good reading for anyone interested:
Off shoring: Understanding the Emerging Global Labor Market, Sackis
The new "off shoring" could be the new "back shoring", Philips
http://www.networkworld.com/news/2007/081707-study-onshoring.html
http://money.cnn.com/2009/09/21/news/economy/detroit_fixers_fernando/index.htm

its all about money... understand the money then you understand the process.

grannygear
07-16-2010, 08:54 PM
There is some labor unrest here and it's a complex subject, but here are a few of the factors driving the current trend:

1. The extreme gap between the rich and the poor has made it obvious, even to the most obtuse local observer, that factory owners are making out like bandits while the working man continues to languish in poverty. This is rightly pissing people off, as the factory drone tries to get to work on his little electric scooter or bicycle while negotiating the BMW, Lexus and Mercedes-Benz flotilla.

2. Inflation is on the rise but worker pay is not. Thus, the civil unrest.

3. No, the government is not bringing in the tanks. China's only labor union is government sponsored, and most factories have a representative (as does the factory where I am now). Some flexibility and compromise is being allowed.

4. So many workers come from outlying provinces, looking for a better life on the Eastern seaboard. They work for pennies, and send what they can back home. But after deducting living expenses there isn't much left. Now, as infrastructure starts to penetrate the hinterlands, migrant workers can increasingly find work closer to home. Why travel a thousand miles for a factory job when now maybe you can live within a hundred miles of the family home, and commute home on weekends?

5. Mfr. jobs are not likely to return to the U.S. in any significant numbers. When labor prices here get too high, there's always Vietnam, Cambodia, India, Bangladesh, Sri Lanka, Burma, etc. It's happening.

lazlo
07-16-2010, 08:57 PM
There is some labor unrest here and it's a complex subject, but here are a few of the factors driving the current trend

Careful there Granny -- we don't want you to go missing! :eek:

grannygear
07-16-2010, 09:16 PM
Careful there Granny -- we don't want you to go missing! :eek:

Hey, free room and board. Might be easier than the last year was for me.

PeteF
07-16-2010, 09:38 PM
Ron. Facts? Mate that's a bit rich. The first link your cited was a hypothetical scenario about what may become, the second a filler piece by CNN about a niche company. There will always be movement of labour and corporations internationally, and if you want to hold these pieces as evidence of manufacturing moving back to the US in large amounts, well good luck. Manufacturing is indeed on the increase in the US, but if you want to Google something have a look at "Manufacturing Output as a percentage of GDP" for some depressing news.

However that's not really the point, more what caught my attentions were these statements from you:

... fully burdened cost of labor in China will soon be well over 50%.

... the 13% transportation cost of the Walmart toy from China could easily be 50% soon.

Where are you getting these figures from?

Don't misunderstand me, I'm not suggesting that I want it this way, or I like it this way (I just had the tip of a Chinese centre drill snap in some work = scrap, so trust me, not my favourite country right now. My fault for buying it of course but all I could get at the time, it's a tiny one). Anyway, all the wishful thinking and positive attitude is great, but some things just are as they are and there's no denying it. Sorry!

ronsmith100
07-17-2010, 03:19 PM
Ron. Facts? Mate that's a bit rich. The first link your cited was a hypothetical scenario about what may become, the second a filler piece by CNN about a niche company. There will always be movement of labour and corporations internationally, and if you want to hold these pieces as evidence of manufacturing moving back to the US in large amounts, well good luck. Manufacturing is indeed on the increase in the US, but if you want to Google something have a look at "Manufacturing Output as a percentage of GDP" for some depressing news.

However that's not really the point, more what caught my attentions were these statements from you:


Where are you getting these figures from?

Don't misunderstand me, I'm not suggesting that I want it this way, or I like it this way (I just had the tip of a Chinese centre drill snap in some work = scrap, so trust me, not my favourite country right now. My fault for buying it of course but all I could get at the time, it's a tiny one). Anyway, all the wishful thinking and positive attitude is great, but some things just are as they are and there's no denying it. Sorry!

I read everything about this. All I was trying to do was explain what is really going on.

http://www.kanabco.com/vmsbbs/index.php?topic=563.msg2530;topicseen#msg2530

http://www.glgroup.com/News/Recent-developments-with-Offshore-Labor-Cost-Savings-1888.html (this one is FIVE years old)

There are hundreds of more books and links... its up to you to read the right stuff.

I have no interest in continuing here.

Good Day

PeteF
07-17-2010, 07:01 PM
I read everything about this. All I was trying to do was explain what is really going on.

http://www.kanabco.com/vmsbbs/index.php?topic=563.msg2530;topicseen#msg2530

http://www.glgroup.com/News/Recent-developments-with-Offshore-Labor-Cost-Savings-1888.html (this one is FIVE years old)

There are hundreds of more books and links... its up to you to read the right stuff.

I have no interest in continuing here.

Good Day

Well see that's the thing, I do read the right stuff; US GDP figures and Labor Market statistics. Yes there ARE indeed hundreds of links, including the first one where you cite yourself on another BB :confused: There are also hundreds of links from people who claim the world is flat too, believe what you like. The author of the second précis said he expected the "window was closing and will probably be shut within the next 5-10 years". Well that was written almost 5 years ago Ron, so maybe you'd like to explain to all those who have recently been made redundant, because their employer has just closed the US plant, that it's not happening? You are absolutely right, the labour cost disparity between China and the US will indeed close, and quite possibly reach parity, but for most manufacturing it has a LONG way to go yet.

In many ways I see a strong resemblance between "offshoring" and "outsourcing" in terms of business trends. When I went through business school "outsourcing' was the new buzz-word and the fashion for the time. At that time I was very vocal (hard to imagine I know) in pointing out many of the, somewhat hidden, pitfalls in outsourcing that weren't being properly considered and would ultimately cost companies. History now tells us that I was right, but so what, outsourcing went on wholesale (and still does). Now the buzzword is "insourcing".

Sadly it doesn't matter who's "right" or "wrong", what may be logical over the long-term versus the short-term, all that matters is what is happening now. What is happening now is that companies are continuing to move offshore. That's the fact. That's backed up by market statistics that are released weekly. Sad and depressing but that's just the way it is. Yes it arguably has slowed down (because most have gone already?). Yes it will eventually stop. Maybe it will eventually turn back the other way. But until that time read all the fiction you like.

Arcane
07-17-2010, 07:24 PM
A little good news for some people! A new manufacturing plant is being built in the USA by Hyundai Heavy Industries, a South Korean company. Story here. (http://www.montgomeryadvertiser.com/article/20100717/BUSINESS/7170346/Hyundai-Heavy-Industries-to-build-plant-in-Montgomery)

PeteF
07-17-2010, 07:31 PM
A little good news for some people! A new manufacturing plant is being built in the USA by Hyundai Heavy Industries, a South Korean company. Story here. (http://www.montgomeryadvertiser.com/article/20100717/BUSINESS/7170346/Hyundai-Heavy-Industries-to-build-plant-in-Montgomery)

Nice. Unfortunately there's a kicker.


HHI will receive an incentive package worth $9.3 million to build the plant, which will cost the company about $90 million.

The incentive package includes $5 million from the state government and $4.3 million for a coalition of local governments, according to Montgomery Mayor Todd Strange. The local contribution includes about $333,000 from Greenville and a combined $450,000 from Prattville and Elmore County, Strange said.

Those incentives include everything from a land purchase to tax breaks and other items.

Strange also said the state, through Alabama Industrial Development Training, will kick in about $2 million worth of training for HHI workers before the plant starts full operations.

oldtiffie
07-17-2010, 08:43 PM
You make a lot of sense Peter.

One of the things that intrigues me in these "USA jobs to (and from?) China ...................... " discussions is that almost invariably those "good" (usually "manufacturing") USA jobs that go to China are equally usually done by ignorant peasants in China, and further that if and when those jobs return to the USA they will be "good" jobs that require highly skilled and highly paid Americans.

It seems quite a conundrum and a paradox to me.

Where am I wrong?

Or do you want Americans to work at the skill and pay levels and under the working conditions and with all the "benefits" that a Chinese (or any other "Asian"?) worker does?

And if all that happened, just how would you make (or "encourage"?) American workers to do it?

Would you?

Would your family?

Just how and when would you benefit?

We have a huge an ongoing high-skills shortage in OZ that looks to continue that is getting a lot of attention from industry and government here. A lot - or most? of it is related to the mining (and big) infrastructure projects here that Peter referred to. Wages are on the way up as its seems are our Reserve (Central) Banks rates. Unemployment is about 5% and either stabilising or falling slightly. House prices and bank lending are booming (is a "bubble" in the offing?) and there is a big shortage of housing and people to build it. All of our banks and financial institutions are in great shape.

I wonder not only how we did it but how we got it as wrong as we have.

Maybe its because we are in the Southern hemisphere and get things upside down (or "back to front").

Or is the USA/UK/European "down-side" problem/s our "up-side" problem.

Sure - we have significant (from our perspective anyway) "problems" but we can and have to live with them - and we will - despite out having our share of "jobs" exported to China (too).